There will be a number of emails from me over the next few weeks, so just to keep you in the loop.

Damage done by CPA Australia is enormous

I spoke at a CEO and Chairmans Forum organised by the Association Forum last week on the CPA issue. I’m not sure of the exact number in the audience but I’m guessing around 120. What I did want to highlight was their shock at the extent of the governance and other issues exposed at CPA Australia (many had followed it and quite rightly were ‘amazed’) and also the anger at the damage this had done for the NFP sector in particular.
The Associations Forum covers a broad range of associations and charities (including professional organisations such as Engineers Australia, RACGP etc) with a chief role being to lift the governance standards. So for many the example of CPA Australia has done enormous harm.
I would suggest that non-CPA’s seem to have a keener appreciation of the woeful behaviour of our leadership.
A very good article on CPA in Crisis was published in their August 2017 magazine, which I shall attach to this email.

I hardly need to mention that the CPA remuneration data was excluded from their sizeable remuneration benchmarks from hundreds of associations. The distortion would have made them meaningless.
I would like to imagine the new CPA Board will refer to the Associations Forum data when it considers the new remuneration levels for the board and management but methinks that is unlikely given the ‘delusions of grandeur’ that have prevailed at CPA for too long.
When CPA say they will look to benchmarks from organisations like the RACV (membership of 2.1 million, and annual revenue of $620m) one can see the delusions will persist.
The only similarity worth benchmarking is that they both have Head Offices in Melbourne!!
But this is CPA Australia, I keep forgetting.
Do you think they might publish the benchmarks they will use?
No, I don’t think so either.

My critique of the Independent review Panels Final Report

This is almost complete, and I shall be sending it out this weekend .
I still regard it as a professional whitewash after a reasonably careful evaluation.
You will have to ‘cut me a bit of slack’ in terms of the length of it (longer than most of you would like) but their preliminary report was 114 pages and their final report was 100 pages, so to ‘do them justice’ and to provide a reasonably objective critique for credibility I do need some space.

I will include a summary at the beginning. The main areas of focus will be governance, remuneration and CPA Australia Advice as this is where I regard the failure of the leadership most obvious and possibly actionable. And obviously where I regard the IRP Final Report as being soft at best.

These are the section headings.

Summary

A Quick Fly Through

Claimer (as distinct from their disclaimer)

Approach Taken

Principles & Perspectives

Glossary & Ready Reference - this is very important, you will need to refer to this constantly as it includes such things as the directors each year, definitions of things like culture, and of course our ethical obligations as CPA’s in APESB110.

Timeline of Events - important to keep the perspective on what the board communicated to us before the mass resignations I reckon.

Legal Action - how they ‘hoodwinked us’ with a scope limited to ‘improvements’. For which they get no plaudits and deserve our condemnation.
They might as well redefine corporate governance as all benefits and no responsibilities. Unaccountable in one word.
This is one of the reasons why I am very distrusting of the current powers that be at CPA Australia with most of the management still in place, and many of the divisional councillors still pre 2018 ‘lets be professional about this and stay quiet’.
The litmus test of real change at CPA Australia still remains whether the new board take legal action against those responsible with probable breaches of directors duties first cab off the rank.

What the IRP Final Report Excluded - Mmmm indeed.

Snapshot of CPA Australia and CPA Australia Advice - not quite the ‘glorious’ picture conveyed by the IRP’s summary I suggest. And the new President still persists with the myth of CPA Australia wanting to be the worlds best member services organisation (see Nov 2017 In The Black). Hubris on steroids I call it.

Culture of CPA Australia - it wasn’t the rogue members, it was the leadership, and how conveniently this was skimmed over.
This is where the real damage was done to CPA Australia.
What sort of culture is developed when the leadership tell the membership in March that the remuneration is fully disclosed with no secrets when they knew all along that it was scandalous. Is that the sort of trusting culture needed for a professional membership organisation to thrive?
How about the ‘bullying’ and intimidation, and the silence by the board and the management?
How about using the consolidation standards and late lodgement to ‘hide’ CPA Australian Advice. Just ask yourselves what sort of culture this is developing in the organisation and within the membership let alone for the outside world to see?
How about the culture that develops from an Independent Review which results in a professional whitewash by not recommending anyone be held accountable?
And a new board that continues to pontificate about CPA aiming to be the worlds best membership service organisation with a weak governance structure and a leadership that bears no responsibility.
We are kidding ourselves.

Part One. Governance. It is just papering over the cracks. Still members can’t vote directly for directors, possible nine year tenures for directors, and of course those wonderful silent divisions feel entitled to more power and say through a Presidential Council.
That’s a neat way to keep the board even more distant from the membership. The only comment I have read since from a divisional councillor was that the corporate governance recommendations look very good. ‘Come in spinner’ was my response.

Part Two. Remuneration. Given the IRP's emphasis on not commenting on legal action to hold anyone accountable they sure went to great lengths to emphasise that legal action to recoup the Malley termination payout was not an option. A sort of ‘we want to discourage any form of legal action against the persons responsible but we don’t want to state is quite so crassly’ approach. Given the failures (with the CEO’s contract of a three year salary termination payment highest on the agenda) it reeks of a pre-determined whitewash to me.

Part Three. CPA Australia Advice. I still find it hard to believe that the IRP censored their comments so much on this, and then passed the buck at the end.

Appendices/Source Documents. With the 2nd and 16th March memo’s from CPA Head Office the prize exhibits.

A Teaser

By the way, just as a bit of a teaser did you note who the IRP did not meet with (or did not mention they met with) to do their report?

The media, especially Joe Aston and Edmund Tadros from the AFR, who were very influential in exposing the charade - nope.

I would have regarded most of these as being necessary.
Have you wondered why they didn’t meet with them eh?

An update on special resolutions

I have set aside next week to finalise the special resolutions I am working on, along with explanatory memorandum, and plan to send out for your consideration by the following weekend (20th February).
We need to have these lodged with CPA two months prior to the AGM (22nd May). So I am thinking by 15th March which should give you all close to three weeks (20th Feb to 15th March) to consider them, and sign and return if you approve.

Other groups (and possibly other members) are working on special resolutions also. I know the Spillers Group have drafted a great resolution to reduce the numbers required to call a members meeting from 5% of members (in practical terms for CPA that means over 6,000 members which is a big ask) to 100 or 200 members (which is what the law was until a few years ago before Corporations Law changes). It is an excellent resolution and provides a real safeguard to any more of the shenanigans we have had to endure to date.
The one’s I am working on are are briefly listed below. In saying this let that not be a discouragement to others who think of others or changes which offer improvements.

My thinking with the resolutions is multi-focussed
- some to 'lock in’ necessary changes (a sort of 'I still don't trust them’ or perhaps ‘lets be realistic’ approach)
- some to influence the board to act now
- some to make sure all the membership are made aware of the real issues
- some to make changes that are necessary if CPA is to be restored
Some of them may not be ‘the proper business of the members’ (although most will) but quite frankly if that is the case we can use them as a form of communicating with the membership, the media and the watching world where we believe the board need to take action.

1. Directors fees to be set at $50,000 plus CPI annually, and the Chairman fee to be set at $130,000 plus CPI. Effective immediately.

2. Directors tenures to be a maximum of 6 years (absolute)

3. Members vote directly for the appointment of directors at the AGM with a minimum of 2 and maximum of 4 nominees for each available position. It is worth adding that the nomination process can still go ahead as mooted but the final decision on appointments is by the members not their ‘appointments council’.
Why the IRP say that skills based directors and members directly voting is mutually exclusive defies me. I think they must be thinking that whoever nominates automatically goes to be a candidate for voting by the members, which is not the same thing. But they know that so I’m not prepared to put that down to a misunderstanding. I think they are just plain wrong are are too influenced by those silent divisional presidents who just love to exclude the members from the process.

4. Full disclosure of the individual remuneration of all directors and the ten most senior managers.

5. Subsidiaries to be included as part of CPA Australia in terms of constitutional requirements.

6. Life member status (clause 7) needs to be approved by direct vote of members at the AGM

7. Life members (clause 7) be required to pay membership subscriptions.

8. Revise the objects of CPA (clause 5) to emphasise the enhancement, development etc of the profession and members with the primary focus on Australia and the need to develop alliances with international bodies rather than competing with them.
This will need a bit of work but the aim is to take the focus off international growth and put the emphasis back on to the profession. The current objects are too ambiguous and open to a very broad interpretation.

9. The the board seek legal advice to consider legal action on the following matters
i. Possible breach of directors duties in relation to the approval of the CEO employment contract which provide him with three years pay on termination.
ii. Possible breach of directors duties in relation to the remuneration paid to the directors and management of CPA Australia Advice.
iii. Possible breach of directors duties and auditors duties in relation to the s.202B disclosure on 31st May 2017.
iv. Possible oppression of minority shareholders (with whatever seems the most obvious reason, possibly removing contact details from website for four months)

10. For the board to review the conflict of interest code at CPA Australia with a view to tightening them so that sponsorships such as the NBL and South Sydney Rugby Leagues are not able to be so easily agreed to, and that full and immediate disclosure to all the members is required.

11. That a Register of International Travel (who, why, cost, when etc) be kept and fully disclosed to members annually, and be accessible for all members to review.

12. That a forensic accountant be appointed to review and report on all International Travel and Third Party service contracts with CPA Australia over the last 7 years.

13. That full disclosure be made of all grants and moneys provided to universities and other educational organisations for research etc. I suggest this is one of the reasons why many in academia have been noticeably quiet about the shenanigans at CPA Australia. A sort of ‘golden handcuffs’ you could say.

Let’s be realistic and be prepared to fight for these things.

Let’s be realistic on what is happening here with the resolutions.
Have you noticed how virtually silent the divisional councillors have been about the IRP Final Report.
They seem to be just on song with the new board.
This is exactly the lesson we need to learn from the past decade, members need to speak up publicly, because the divisions are like ASIC - we know they are there but they just keep silent (all very professional, ‘don’t rock the boat’ sort of thing). Their approach (probably with word from on high at CPA Head Office) is we need to show solidarity behind the new board or we can’t speak openly, that would be disloyal, or
the members are just too fragile and unthinking to appreciate the understanding we as divisional councillors have.

Please, if CPA cannot take members speaking up openly and publicly on such important issues now then we might as well ‘pack up and go home’.

Lets also be aware that the new board, and the divisions will be fighting hard to maintain the status quo of the IRP recommended changes only, so we will really need to work hard to get as many members as possible voting (in person or by proxy) and to encourage members not to give their proxies to the Chair.

I would encourage members to think carefully about the recommended changes from the IRP and the new board because I regard them as very very weak and not dealing with some of the obvious failings of the past - possible nine year director tenures, members not vote directly for the board etc. Can’t wait to see what sort of clever methodology they use to keep the board remuneration levels high.

Governance and Strategy Discussion Groups meeting in Sydney and Melbourne

The Sydney group meeting this month is on Thursday 15th Feb at CPA offices, Harrington Street. I will be going through the resolutions listed above so we can discuss them openly with members. So come along if you can make it.
The Melbourne Group also meets this month I believe on 22nd Feb however it might be best to contact CPA to confirm the details.

The AGM 22nd May 2018 Melbourne

I’m not too sure how many of you are planning to attend however if you can’t can I encourage you to think about using your proxy carefully.
I would discourage giving it to the Chair/President. To be quite honest I just do not trust the new board and chair.
More detail will be provided on the proxies once the Notice of AGM is sent out but if last years is anything to go by then you can appoint whomever you want as a proxy (does not need to be a member) but you need to notify CPA two or three days beforehand.
It would be handy if we could also have some proxies for the media (AFR, ABC and The Australian in particular) to attend.
More details will come on this.

I daresay it would also be nice to have a catch up the morning after the AGM over a cup of coffee for those attending. Most of our contacts have been over is issue without our ever having personally met, which is a shame. So let’s try to correct that.

Fighting Fund

Thanks again to all the members who contributed to this. It has been very useful.
There is still a balance of $5537.60, and I will present the ‘audited’ report on how the money was spent next week. I have asked a well established CPA firm in Newcastle to review/‘audit’ the fund.
In summary the report will show

I envisage most of the remaining balance will go on expenditure to push the resolutions and gain proxies.
Whatever it is spent on it is spent carefully and hopefully maximising the strategic value.

Final Word (for the moment)

I have a very busy week to finalise the Critique of the IRP Final Report.

But it needs to be done.
Unfortunately not quite as lucrative for me as it was for the Independent Review Panel and their secretarial assistant Nous Group.
They get the dollars, and we cop the criticism. Oh the rewards of being ‘oh so professional’, being ‘eminent and well connected’, and of course independent not covering things like endorsing Alex Malleys The Naked CEO book.
Of course having the old remaining rump of a board with the able assistance of CPA’s own in-house general counsel writing the terms of reference for the “independent’ review certainly helps eh?

Oh yes, this is not just a case study in the failure of CPA Australia but also one on how to cover it up so professionally that no-one is held to blame.
It’s just too beautiful for words.

And then to hear the new (and previously silent and unknown - how convenient eh) President come out as the advocate to make CPA Australia the worlds best member service organisation just makes me cringe.

13. That full disclosure be made of all grants and moneys provided to universities and other educational organisations for research etc. I suggest this is one of the reasons why many in academia have been noticeably quiet about the shenanigans at CPA Australia. A sort of ‘golden handcuffs’ you could say.

Hi Brett, I don't think its this blatant - though there is still a handcuff that's been wielded by CPA through its accreditation of courses.

Grants might smooth over some things, but the possibility of them making accreditation review difficult would bring a Corporatized university administration down hard on an outspoken academic much more effectively.

They dropped their accreditation standards so far when Malley took control that some of the more diligent volunteers dropped off the accreditation panels. There was a lot of pressure to accredit the foreign courses which were of questionable standard but central to the plan.
Malley's reign also coincided with domestic business class for being good volunteers to these roles (and I expect most committee roles).

I think you will find Eric that the reason many in academia do not speak too loudly is because of this. Many have corroborated that with me.
It doesn't surprise me about the accreditation. Seems like they 'gamed' the academic process also.
And yes the 'gerrymandering' of committees etc. Hard to prove but given what we know it 'fits the bill' with their approach.
Let me tell you about Macquarie University from which Alex Malley was terminated.
He then comes back in some sort of 'executive resident ' type position in the Corporate Governance Centre at Macq Uni which CPA generously funded.
The irony is inescapable, and the silence from MU at all levels even more astounding.
So I think the way to nip in the bud this sort of thing is to jst be open and transparent about what CPA provides.
There are enough MU connections with CPA to almost write a book.

This is not being picky or pedantic, quite frankly it is the sort of openness and transparency that should be the hallmark of what CPA does.
We sold know to whom, and what for any grant and research money is provided.

For some reason this culture has developed at all levels in CPA where they think minimum disclosure is the way, and for members to ask questions is just them being difficult. What do they have to hide.
The leaning should be always to more not less openness and transparency.
I think their reluctance indicates a problem.
Think of overseas travel by any CPA staff and/or board, and any air travel by the board. Why don't they just disclose and open it up? Thats a rhetorical question.

I would recommend that life membership be stripped from Malley and the other directors who have breached their duties.

I know that everyone in here would 100% support that Malley is stripped of his life membership, however I think someone was advised that CPA would find this sort of proposal 'defamatory' as they have said in their update today.

Wouldn't it be easier to simply get rid of this membership class. There's no way that's defamatory; as it's simply the abolition of a class of membership and affects many people, not just one ... with no grandfathering (maybe give them all FCPA status if they don't already have it).

Removal of life membership for all, would not be defamatory. Then they could create a new system to recognise those members who have contributed without financial gain or been a been a president or board member. Life membership should not be a given, because the individuals were past presidents or board members. There are many individuals who have spent years doing activities, without much glory or even remuneration. These current life membership sound like Tony Abbott's Knighthoods, and how long did that last?

A lot of the individuals on the life membership list are past presidents. This does remind me of a Yes Minister episode, "Earn your honours"The Minister has decided that the civil servants will no longer just receive honours they have to earn them, Humphrey is unuaslly speechless.

It would also be suggested that they cancel the Past President Dinner at the end of the AGM. This sends a terrible message to the general membership. No wonder Graeme Wade said at the Senate inquiry, that so few members turned up to the AGM, because then it enabled them to have their private dinner, at the members expense without any members complaining. It would appear that the board are not good enough to mix with the membership at the end of the AGM. I suppose they don't want to have to answer question about how they actually spend the membership funds, or how much they get paid.

All the past Presidents since 2007 have been made life members, apart from Tyrone Carlin who resigned suddenly last year in the interests of rejuvenation!!! Such selfless service eh?
I think the best we can do is at least have them pay an annual membership fee as do we all.
Isn’t it amazing that the leadership over the last ten years has been shown to have been abysmal in so many ways yet the leaders walk way with life memberships, millions in termination pay and totally unaccountable.
It’s Corporate Governance CPA Style - what a doozy eh?
Can’t wait to see the code of conduct to get stuck into those naughty rebel members who spoke up about these things. Oh yes, CPA Australia certainly has a way of paving new standards.